Distressed bonds bounce back after two-day sell-off; California Resources rise with oil

By Stephanie N. Rotondo

Seattle, June 28 – Distressed bonds were doing better on Tuesday, as the broader markets rebounded from two days of hefty losses.

Those losses were due to concerns about the United Kingdom’s vote to leave the European Union. Though uncertainties about what that will mean to the country – and the markets – continue, Tuesday’s rally was attributed to the sell-off being overdone.

“In general, everything was bouncing back a little bit,” a trader said. “A lot of things recovered about 1 to 2 points.”

However, the trader also noted that investors were opting for more “higher-quality names” than for distressed credits.

That being said, an over 3.5% gain in domestic crude oil prices – helped in part by the broader rebound, as well as a weaker dollar and a looming oil and gas strike in Norway – was boosting oil and gas names such as California Resources Corp.

One trader said the 8% second-lien notes due 2022 were “pretty active,” moving “up a bunch” to a 68 to 68½ context. Another trader said the issue was up nearly 2 points at 67½.

The second trader also saw the 6% notes due 2024 inching up almost a point to 46½.

Elsewhere, Intelsat SA paper was also mostly better for the day, though on no news.

A trader said the 8% senior secured notes due 2022 linked to Intelsat Jackson Holdings SA “rallied back up close to 98,” after getting “beat up” on Monday.

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